THE BLOG
08/20/2014 12:34 pm ET Updated Oct 20, 2014

The Case of the Deleted Social Security Data: Why It Is Bad for Workers and Retirees

In their 2014 report on the finances of Social Security, the trustees of the system deleted key information on the replacement rates of Social Security. What's the harm in that, right? Isn't this just a technical or administrative issue?

According to Alicia Munnell, director of the Center for Retirement Research at Boston College and one of our board members, this deletion appears to be part of a broader attack on Social Security by a "band of critics who argue that all is right in the world: People will have plenty of money," in order to justify cuts to the program.

In two recent blog entries for MarketWatch, Munnell explains the significance of the deletion to current and future retirees. Since 1989, the Trustees' reports have included information that shows how much Social Security replaces in pre-retirement income. For moderate-wage earners, the replacement rates are generally about 40 percent according to past reports. Since financial planners typically recommend that people need about 75 percent of pre-retirement income to make ends meet in retirement, it's important for people to understand how much Social Security provides, so they have a more accurate idea of how much they need to save for retirement.

Also, when policymakers shape legislation to expand retirement savings and pension coverage, it's important for them to know the truth about how much Social Security provides, which isn't a lot. For the typical retiree, Social Security averages just over $15,000 a year - about equivalent to the federal minimum wage. Women get even less.

According to Munnell, the deletion of this income replacement information may be a way to mollify those who dislike Social Security on ideological grounds and who would like to see the program cut. Using badly skewed numbers, these people contend that Social Security replaces 69 percent of pre-retirement earnings - not 40 percent.

Why would these critics want to paint a rosier picture of Social Security benefit levels? As Munnell points out:

The whole purpose of the attack on Social Security replacement rates is an attempt to provide a rationale for cutting benefits. If Social Security were really as high as critics allege, then they would be ripe for reduction.

She also states:

If Social Security replaces less, then future workers must depend on what is now a fairly wobbly 401(k) system for more. Without replacement-rate numbers, policymakers will have no idea what they are doing to the retirement security of future workers as they consider alternative Social Security provisions.

Opponents of Social Security know that there's more than one way to skin a cat. If they can't get benefits cuts today, they'll simply cut the information required to protect the system. The Social Security Trustees should not give in to politics. They should restore this critical information, and they should use the right numbers.

This blog entry was cross-posted on the Pension Rights Center website.

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